MARSHALL EDWARDS, INC.
2008 STOCK OMNIBUS EQUITY COMPENSATION PLAN
The Plan
authorizes the Compensation Committee to provide Advisors,
Employees and Non-Employee Directors that are providing, or have
agreed to provide, services to the Company or its Affiliates, who
are in a position to contribute to the long-term success of the
Company or its Affiliates, with Options to acquire Shares. The
Company believes that this incentive program will cause those
Advisors, Employees and Non-Employee Directors to increase their
interest in the welfare of the Company and its Affiliates, and aid
in attracting, retaining and motivating Advisors, Employees and
Non-Employee Directors of outstanding ability.
Capitalized terms
used herein shall have the meanings set forth in this
Section.
(a) “Advisor”
shall mean advisors who render bona fide services to the Company or
its subsidiaries where the services are not in connection with the
offer and sale of securities in a capital-raising transaction and
the Advisors do not directly or indirectly promote or maintain a
market for the Company’s securities.
(b) “Affiliate”
shall mean any Person which is included as a member with the
Company in a controlled group of corporations, within the meaning
of Code section 414(b), or which is a trade or business (whether or
not incorporated) included with the Company in a group of trades or
business under common control, within the meaning of Code section
414(c); provided , however , that in applying Code
sections 1563(a)(1), (2) and (3) for purposes of
determining a controlled group of corporations under Code section
414(b), the language “at least 20 percent” is used
instead of “at least 80 percent” each place it
appears in Code sections 1563(a)(1), (2) and (3), and in
applying Treas. Reg. section 1.414(c)-2 for purposes of determining
trades or businesses (whether or not incorporated) that are under
common control for purposes of Code section 414(c), the language
“at least 20 percent” is used instead of “at
least 80 percent” each place it appears in Treas. Reg.
section 1.414(c)-2.
(c) “Board”
shall mean the Board of Directors of the Company.
(d) “Cause”
shall have the meaning ascribed thereto in any effective employment
or service agreement between the Company and the Grantee, or if no
employment agreement is in effect that contains a definition of
cause, then Cause shall mean a finding by the Compensation
Committee, in its sole and absolute discretion, that the Grantee
has (i) committed a felony or a crime involving moral
turpitude, (ii) committed any act of gross negligence or
fraud, (iii) failed, refused or neglected to substantially
perform his duties (other than by reason of a physical or mental
impairment) or to implement the directives of the Company,
(iv) materially violated any policy of the Company, or
(v) engaged in conduct that is materially injurious to the
Company, monetarily or otherwise.
(e) “Change
in Control” shall be deemed to have occurred if:
(i) Any
“person” (as such term is used in sections 13(d) and
14(d) of the Exchange Act) becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50%
of the voting power of the then
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outstanding
securities of the Company; provided that a Change in Control shall
not be deemed to occur as a result of a transaction in which the
Company becomes a subsidiary of another corporation and in which
the stockholders of the Company, immediately prior to the
transaction, will beneficially own, immediately after the
transaction, shares entitling such stockholders to more than 50% of
all votes to which all stockholders of the parent corporation would
be entitled in the election of directors.
(ii) The
consummation of (A) a merger or consolidation of the Company
with another corporation where the stockholders of the Company,
immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation,
shares entitling such stockholders to more than 50% of all votes to
which all stockholders of the surviving corporation would be
entitled in the election of directors, or where the members of the
Board, immediately prior to the merger or consolidation, would not,
immediately after the merger or consolidation, constitute a
majority of the board of directors of the surviving corporation,
(B) a sale or other disposition of all or substantially all of
the assets of the Company, or (C) a liquidation or dissolution
of the Company.
Notwithstanding
the foregoing definition of Change in Control, the Compensation
Committee may modify the definition of Change in Control for a
particular Grant as it deems appropriate to comply with section
409A of the Code or otherwise.
(f) “Code”
shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.
(g) “Company”
shall mean Marshall Edwards, Inc., a corporation organized under
the laws of the State of Delaware.
(h) “Compensation
Committee” shall mean the members of the Board appointed by
the Board to serve as the Compensation Committee with
responsibility for the administration of the Plan, or if no such
members of the Board are appointed, then the Compensation Committee
shall consist of all of the members of the Board. In any case, the
Board shall approve and administer all grants made to Non-Employee
Directors. The members of the Board appointed to serve as the
Compensation Committee, if applicable, should consist of two or
more Persons who are “outside directors” as defined
under Code section 162(m), and related Treasury regulations, and
“non-employee directors” as defined under
Rule 16b-3 under the Exchange Act. To the extent that the
Board or a subcommittee administers the Plan, references in the
Plan to the “Compensation Committee” shall be deemed to
refer to the Board or such subcommittee.
(i) “Disability”
or “Disabled” shall mean a Grantee’s becoming
disabled within the meaning of Code section 22(e)(3) or as
otherwise determined by the Compensation Committee.
(j) “Employee”
shall mean any individual that is providing, or has agreed to
provide, services to the Company or an Affiliate of the Company as
an employee.
(k) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
(l) “Exercise
Price” shall mean the purchase price of a Share subject to an
Option, which shall not be less than the Fair Market Value of a
Share as of the date an Option is granted.
(m) “Fair
Market Value” of a Share on any given date, unless the
Compensation Committee determines otherwise with respect to a
particular Grant, shall mean (i) if the principal trading
market for the Shares is a national securities exchange, the last
reported sale price of a Share on the relevant date or
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(if there were
no trades on that date) the latest preceding date upon which a sale
was reported, (ii) if the Shares are not principally traded on
such exchange, the mean between the last reported “bid”
and “asked” prices of a Share on the relevant date, as
reported on the OTC Bulletin Board, or (iii) if the Shares are
not publicly traded or, if publicly traded, are not so reported,
the Fair Market Value per share shall be as determined by the
Compensation Committee pursuant to any reasonable valuation method
authorized under the Code.
(n) “Grant”
shall mean a grant of Options, SARs, Stock Awards, Stock Units or
Other Stock-Based Awards under the Plan.
(o) “Grant
Letter” shall mean a letter, certificate or other agreement
accepted by the Grantee, evidencing the making of a Grant hereunder
and containing such terms and conditions, not inconsistent with the
express provisions of the Plan, as the Compensation Committee shall
approve.
(p) “Grantee”
shall mean an Advisor, Employee or Non-Employee Director made a
Grant under the Plan.
(q) “ISO”
shall mean any Option or portion thereof that meets the
requirements of an incentive stock option under Code section 422
and that is designated by the Compensation Committee to be an
ISO.
(r) “Non-Employee
Director” shall mean a member of the Board who is not an
Employee.
(s) “Nonqualified
Option” shall mean any Option or portion thereof that is not
an ISO.
(t) “Options”
shall refer to options issued under and subject to the
Plan.
(u) “Other
Stock-Based Award” shall mean any Grant based on, measured by
or payable in Shares, as described in Section 9.
(v) “Person”
shall mean an individual, partnership, corporation, limited
liability company or partnership, trust, unincorporated
organization, joint venture, government (or agency or political
subdivision thereof) or any other entity of any kind.
(w) “Plan”
shall mean this Marshall Edwards Inc. 2008 Omnibus Equity
Compensation Plan as set forth herein and as amended from time to
time.
(x) “SAR”
shall mean a stock appreciation right with respect to a
Share.
(y) “Share”
shall mean a share of common stock of the Company.
(z) “Stock
Award” shall mean an award of Shares, with or without
restrictions.
(aa) “Stock
Unit” shall mean a unit that represents a hypothetical
Share.
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Section 3.
Shares Available under the Plan
(a)
Shares Authorized . Subject to the provisions of
Section 13, the total number of Shares with respect to which
Grants may be made under the Plan shall not exceed 7,000,000. If
and to the extent Options or SARs granted under the Plan terminate,
expire or are canceled, forfeited, exchanged or surrendered without
having been exercised or if any Stock Awards, Stock Units or Other
Stock-Based Awards are forfeited, terminated or otherwise not paid
in full, the Shares subject to such Grants may again be available
for purposes of the Plan.
(b)
Individual Limits . The maximum aggregate number of Shares
that shall be subject to Grants made under the Plan to any
individual during any calendar year shall be 1,000,000 Shares,
subject to adjustment as described in Section 13
below.
Section 4.
Administration of the Plan
(a)
Authority of the Compensation Committee . The Plan shall be
administered by the Compensation Committee. The Compensation
Committee shall have full and final authority to take the following
actions, in each case subject to and consistent with the provisions
of the Plan:
(i) to select the
Advisors, Employees and Non-Employee Directors to whom Grants may
be made;
(ii) to determine
the number of Shares subject to each such Grant;
(iii) to determine
the terms and conditions of any Grant made under the
Plan;
(iv) to determine
whether to accelerate the exercisability of any or all applicable
outstanding Grants at any time for any reason;
(v) to determine
the restrictions or conditions related to the delivery, holding and
disposition of Shares acquired pursuant to a Grant;
(vi) to prescribe
the form of each Grant Letter;
(vii) to adopt,
amend, suspend, waive and rescind such rules and regulations and
appoint such agents as the Compensation Committee may deem
necessary or advisable to administer the Plan;
(viii) to correct
any defect or supply any omission or reconcile any inconsistency in
the Plan and to construe and interpret the Plan and any Grant,
Grant Letter or other instrument hereunder; and
(ix) to make all
other decisions and determinations as may be required under the
terms of the Plan or as the Compensation Committee may deem
necessary or advisable for the administration of the
Plan.
All Grants shall
be made conditional upon the Grantee’s acknowledgement, in
writing or by acceptance of the Grant, that all decisions and
determinations of the Compensation Committee shall be final and
binding on the Grantee, his or her beneficiaries and any other
Person having or claiming an interest under such Grant.
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(b)
Manner of Exercise of Compensation Committee Authority . Any
action of the Compensation Committee with respect to the Plan shall
be final, conclusive and binding on all Persons, including the
Company, its Affiliates, Grantees, or any Person claiming any
rights under the Plan from or through any Grantee, except to the
extent the Compensation Committee may subsequently modify, or take
further action not inconsistent with, its prior action. If not
specified in the Plan, the time at which the Compensation Committee
must or may make any determination shall be determined by the
Compensation Committee, and any such determination may thereafter
be modified by the Compensation Committee. The express grant of any
specific power to the Compensation Committee, and the taking of any
action by the Compensation Committee, shall not be construed as
limiting any power or authority of the Compensation Committee. The
Compensation Committee may delegate to officers or managers of the
Company or any Affiliate of the Company the authority, subject to
such terms as the Compensation Committee shall determine, to
perform such functions as the Compensation Committee may determine,
to the extent permitted under applicable law.
(c)
Limitation of Liability . Each member of the Compensation
Committee shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him by any officer or
other employee of the Company or any of its Affiliates, the
Company’s independent certified public accountants or any
executive compensation consultant, legal counsel or other
professional retained by the Company to assist in the
administration of the Plan. To the fullest extent permitted by
applicable law, no member of the Compensation Committee, nor any
officer or employee of the Company acting on behalf of the
Compensation Committee, shall be personally liable for any action,
determination or interpretation taken or made in good faith with
respect to the Plan, and all members of the Compensation Committee
and any officer or employee of the Company acting on its behalf
shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action,
determination or interpretation.
The Compensation
Committee may grant Options to an Employee, Advisor or member of
the Board upon such terms as the Compensation Committee deems
appropriate. The following provisions are applicable to
Options:
(a)
Number of Shares . The Compensation Committee shall
determine the number of Shares that will be subject to each Grant
of Options to an Employee, Advisor or member of the
Board.
(b) Type
of Option and Price .
(i) The
Compensation Committee may grant ISOs or Nonqualified Stock Options
or any combination of the two, all in accordance with the terms and
conditions set forth herein. ISOs may be granted only to employees
of the Company or its parent or subsidiary corporations, as defined
in section 424 of the Code. Nonqualified Options may be granted to
Employees, Advisors or members of the Board.
(ii) The
Exercise Price of Shares subject to an Option shall be determined
by the Compensation Committee and may be equal to or greater than
the Fair Market Value of a Share on the date the Option is granted.
However, an ISO may not be granted to an Employee who, at the time
of grant, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, or any parent
or subsidiary corporation of the Company, as defined in Code
section 424, unless the Exercise Price per Share is not less than
110% of the Fair Market Value of a Share on the date of
grant.
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(iii) Each
ISO shall provide that, if the aggregate Fair Market Value of the
Shares on the date of the grant with respect to which ISOs are
exercisable for the first time by a Grantee during any calendar
year, under the Plan or any other stock option plan of the Company
or a parent or subsidiary of the Company, exceeds $100,000, then
the Option, as to the excess, shall be treated as a Nonqualified
Option.
(c)
Option Termination . Except as provided below, an Option may
only be exercised while the Grantee is employed or engaged by the
Company or any Affiliate as an Advisor, Employee or member of the
Board. Unless otherwise determined by the Compensation Committee
and set forth in a Grant Letter, Options shall terminate on the
earliest of:
(i) the
date on which the Grantee is no longer employed or engaged by the
Company and any Affiliate on account of the Grantee’s
termination for Cause. In addition, notwithstanding any other
provisions of this Section 5, if the Compensation Committee
determines that the Grantee has engaged in conduct that constitutes
Cause at any time while the Grantee is employed or engaged by the
Company and any Affiliate or after the Grantee’s termination
of employment or engagement, any Option held by the Grantee shall
immediately terminate and the Grantee shall automatically forfeit
all Shares underlying any exercised portion of an Option for which
the Company has not yet delivered the Share certificates, upon
refund by the Company of the Exercise Price paid by the Grantee for
such Shares. Upon any exercise of an Option, the Company may
withhold delivery of Share certificates pending resolution of an
inquiry that could lead to a finding resulting in a
forfeiture;
(ii) the
91st day following the date the Grantee is no longer employed or
engaged by the Company and any Affiliate for any reason other than
Cause, death, or Disability; provided , however ,
that in all cases the portion of any Option that is not vested on
the date of termination of employment or engagement shall terminate
immediately upon such termination;
(iii) the
first anniversary of the date the Grantee’s employment or
engagement by the Company and any Affiliate terminates on account
of the Grantee’s death or Disability; provided ,
however , that the portion of any Option that is not vested
on the date of such termination of employment or engagement shall
terminate immediately upon such termination;
(iv) the
fifth anniversary of the date of grant as set forth in the Grant
Letter ; and
(v) cancellation,
termination or expiration of the Options pursuant to action taken
by the Compensation Committee in accordance with
Section 13.
For purposes of
the Plan, employment or engagement by the Company and any Affiliate
shall mean employment or service as an Employee, Advisor or member
of the Board (so that, for purposes of exercising Options, a
Grantee shall not be considered to have terminated his employment
or engagement until the Grantee ceases to be an Employee, Advisor
and member of the Board), unless the Compensation Committee
determines otherwise.
(d)
Exercise of Options. Only the vested portion of any Option
may be exercised. A Grantee may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of
exercise to the Company. The Grantee shall pay the Exercise Price
for an Option as specified by the Compensation Committee
(i) in cash, (ii) unless the Compensation Committee
determines otherwise, by delivering Shares owned by the Grantee and
having a Fair Market Value on the date of exercise at least equal
to the Exercise Price or by attestation (on a form prescribed by
the Compensation Committee) to ownership of Shares having a Fair
Market Value on the date of exercise at least equal to the Exercise
Price, (iii) by payment through a broker in accordance with
procedures permitted by Regulation T of the
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Federal Reserve
Board, or (iv) by such other method as the Compensation
Committee may approve. In addition, in the event the Compensation
Committee so determines, to the extent an Option is at the time
exercisable for vested shares of Company Stock, all or any part of
that vested portion may be surrendered to the Company for an
appreciation distribution payable in Shares with a Fair Market
Value at the time of the Option surrender equal to the dollar
amount by which the then Fair Market Value of the Shares subject to
the surrendered portion exceeds the aggregate Exercise Price
payable for those Shares. Shares used to exercise an Option shall
have been held by the Grantee for the requisite period of time
necessary to avoid adverse accounting consequences to the Company
with respect to the Option. Payment for the Shares to be issued or
transferred pursuant to the Option, and any required withholding
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